Medicare eligibility age said off the table

WASHINGTON A combination of tax hikes and automatic spending cuts considered a threat to the U.S. economy are slated to begin Jan. 1. Here are developments in efforts to avert the so-called “fiscal cliff”:

One of President Barack Obama's top Senate allies said Thursday that an increase in the Medicare eligibility age is “no longer one of the items being considered by the White House” in negotiations.

Sen. Dick Durbin told reporters that he did not get the information directly from the president or the White House. But as the Senate's No. 2 Democrat, Durbin is regularly apprised of the status of negotiations by key players such as Majority Leader Harry Reid, D-Nev.

Senior White House aide Gene Sperling briefed Senate Democrats on the talks Thursday and declined to tell them whether the administration was taking the issue off the table, said a senator who was present.

Increasing the eligibility age from 65 is a key demand by Republicans seeking cost curbs in popular benefit programs in exchange for higher tax revenues.

Durbin's comments on the Medicare eligibility age were surprising, since negotiators including Reid have been careful to not preclude the possibility of agreeing to an increase.

The fight over taxes

At a news conference, Senate Majority Leader Reid again called on House Republicans to allow a vote on renewing Bush-era tax cuts for the 98 percent of taxpayers whose incomes are below $250,000. Obama vows to force rates on family income exceeding $250,000 from a top rate of 35 percent to the Clinton-era rate of 39.6 percent. He said the alternative is to allow tax cuts for everyone to expire.

“At some point, reality should set in,” Reid said.

Reid cited comments by Sen. John Cornyn of Texas to Politico.com, in which Cornyn, soon to be the No. 2 Senate Republican, said, “I believe we're going to pass the $250,000 and below sooner or later, and we really don't have much leverage” because those rates are going to expire anyway on Dec. 31.

On Thursday, Sen. Jim DeMint, a South Carolina Republican and leading conservative figure, predicted Obama would prevail in the fight over taxes.

“He's going to get his wish. I believe we're going to be raising taxes, and not just on the top earners,” DeMint, who is leaving the Senate to become president of the Heritage Institution think tank, said in an appearance on “CBS This Morning.”

Adding to the growing sense that the two sides might not come together, rank-and-file Republicans said the leadership had not begun laying the groundwork for a major concession on taxes.

But House Speaker John Boehner pointedly did not rule out a vote on legislation before the end of the year to extend Bush-era tax cuts for the middle class – and in so doing allow tax cuts on incomes more than $250,000 to expire.

“The law of the land today is that everyone's income taxes are going to go up Jan. 1,” Boehner said. “I've made it clear that I think that's unacceptable, but until we get this issue resolved, that risk remains.”

Potential outcomes

Washington now faces three potential outcomes to the fiscal impasse, lawmakers from both parties say. A broad deal could be reached in which some taxes go up immediately and some cuts are secured to stop the broader tax increases and halt the across-the-board tax cuts – and to lock in targets for entitlement savings and revenue produced by changes in tax policy revenue to be worked out next year.

If no deal is reached, Republicans are increasingly talking about a more hostile outcome in which the House passes legislation that extends tax cuts for the middle class, sets relatively low tax rates on dividends, capital gains and inherited estates, and cancels the across-the-board defense cuts, but leaves in place across-the-board domestic cuts.

Then House Republicans would engage in what Boehner, in a private meeting last week, called “trench warfare,” a running battle with the president on spending, first as the government approaches its statutory borrowing limit early next year, then in late March, when a stopgap government spending bill runs out.

Finally, many Republicans say it is now possible that the government will plunge into the fiscal unknown. Rep. Patrick McHenry, R-N.C., said Boehner had given Republicans no indication “that he's going to budge.”

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